BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    SB 1425


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          Date of Hearing:  June 27, 2016 


                       ASSEMBLY COMMITTEE ON NATURAL RESOURCES


                                 Das Williams, Chair


          SB  
          1425 (Pavley) - As Amended March 28, 2016


          SENATE VOTE:  26-11


          SUBJECT:  Water-energy nexus registry


          SUMMARY:  Requires the Air Resources Board (ARB), in  
          consultation with relevant state agencies and The California  
          Climate Action Registry, to develop a registry of greenhouse gas  
          (GHG) emissions resulting from the water-energy nexus.  


          EXISTING LAW, under the California Global Warming Solutions Act  
          of 2006 (AB 32): 


          1) Requires ARB to determine the 1990 statewide GHG emissions  
             level and approve a statewide GHG emissions limit that is  
             equivalent to that level to be achieved by 2020.


          2) Requires ARB to adopt regulations to require the reporting  
             and verification of statewide GHG emissions and requires  
             those regulations, where appropriate and to the maximum  
             extent feasible, to incorporate the standards and protocols  
             developed by the California Climate Action Registry.








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          3) Specifies that entities that voluntarily participated in the  
             California Climate Action Registry prior to December 31,  
             2006, and have developed a GHG emissions reporting program,  
             are not required to significantly alter their reporting or  
             verification program, except as necessary to ensure complete  
             and accurate reporting.


          THIS BILL: 


          1)Defines terms used in the bill, including: 


             a)   "Climate Registry" as the nonprofit organization that is  
               a successor to California Climate Action Registry; and,


             b)   "Registry" as the water-nexus registry established by  
               the bill.  


          2)Requires ARB, in consultation with other relevant state  
            agencies and the Climate Registry, to develop and administer a  
            registry of GHG emissions resulting from the water-energy  
            nexus using the best available data.  


          3)States that participation in the Registry is voluntary and  
            open to any entity conducting business in the state.   
            Authorizes a participating entity to register its emissions,  
            including emissions generated outside the state, or an  
            entity-wide basis and to use the services of the Registry.  


          4)Requires ARB to additionally: 









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             a)   Help participating entities establish emissions  
               baselines; 


             b)   Encourage voluntary actions to increase water and energy  
               efficiency measures to reduce the carbon intensity of the  
               state's water system; 


             c)   Enable participating entities to record voluntary  
               entity-wide GHG emissions reductions made after 1990 in a  
               consistent format that is supported by third-party  
               verification; 


             d)   Ensure that sources in the state receive appropriate  
               consideration for entity-level verified emissions  
               reductions under potential future regulatory regimes or  
               qualification for financing opportunities relating to GHG  
               emissions. 


             e)   Recognize, publicize, and promote participating entities  
               making voluntary reductions of GHG emissions; and, 


             f)   Recruit broad participation in the registry from all  
               economic sectors and regions in the state.  


          5)States related findings and declarations.  


          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, this bill has a one-time cost of $475,000 for  
          programming costs to develop the electronic registry platform.   
          Ongoing costs, likely in the range of $2 to $3 million, to  
          administer the program.








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          COMMENTS:  


          1)The Climate Registry.  SB 1771 (Sher, Chapter 1018, Statutes  
            of 2000) required the Secretary of the Resources Agency to  
            establish the California Climate Action Registry as a public  
            benefit nonprofit corporation that would record and register  
            voluntary GHG emission reductions made by California entities  
            after 1990.  The bill required the registry to perform various  
            functions, including adopting standards for verifying  
            emissions reductions; adopting a list of approved auditors  
            that would verify emissions reductions; establishing emissions  
            reduction goals; designing and implementing efficiency  
            improvement plans; maintaining a record of all emissions  
            baselines and reductions; and, recognizing, publicizing, and  
            promoting entities that participate in the registry.  SB 1771  
            established a governing board comprised of the Secretary of  
            the Resources Agency, the Secretary of Environmental  
            Protection, and five public members appointed by the Governor.

          The California Climate Action Registry was required to, among  
            other things:  1) help various entities in the state to  
            establish emissions baselines; 2) encourage voluntary actions  
            to increase energy efficiency and reduce GHG emissions; 3)  
            enable participating entities to record voluntary GHG  
            emissions reductions made after 1990 in a consistent format  
            that is supported by third-party verification; 4) ensure that  
            sources in the state receive appropriate consideration for  
            verified emissions reductions under any future federal  
            regulatory regime relating to GHG emissions; 5) recognize,  
            publicize, and promote registrants making voluntary  
            reductions; and, 6) recruit broad participation in the process  
            from all economic sectors and regions of the state.  









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          The California Climate Action Registry closed in December 2010.   
            The Climate Registry formed as the successor agency to the  
            California Climate Action Registry.  The Climate Registry is a  
            nonprofit organization, whose board of directors comprises  
            over 50 representatives from U.S. states and Canadian  
            provinces and territories.  It offers tools and services for  
            organizations to measure, verify and report the carbon in  
            their operations. 

          This bill is modeled after the California Climate Action  
            Registry.

          2)Water, energy, and emissions.  According to the California  
            Energy Commission (CEC), water-related energy use in  
            California consumes approximately 20% of the state's  
            electricity and 30% of the state's non-power plant natural gas  
            (i.e., natural gas not used to produce electricity).  The  
            water sector uses electricity to pump, treat, transport,  
            deliver, and heat water.  CEC also found that the most energy  
            intensive uses of water in California are associated with end  
            uses by the customer (e.g., heating, processing, and  
            pressurizing water) and that 75% of the electricity and nearly  
            all of the natural gas use related to water in California is  
            associated with water heating.  The state's ongoing drought is  
            expected to cause increases in groundwater pumping, water  
            treatment, and water recycling, which could further increase  
            energy use associated with water.



          Electric utilities are required to disclose the sources of the  
            electricity they sell.  However, this requirement does not  
            extend to water utilities that are not retail electricity  
            providers.  An April 2015 report from the Union of Concerned  
            Scientists, Clean Energy Opportunities in California's Water  
            Sector, reports that although some water and wastewater  
            utilities independently report the sources of their  
            electricity, the information is not compiled in a standardized  
            format or updated on a regular schedule across the water  








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            sector. 

          The report states that the data gap makes it difficult to get a  
            clear picture of the amount and type of electricity  
            California's water and wastewater utilities rely on and that  
            this information gap makes it difficult to understand how the  
            water sector's electricity choices impact GHG emissions and  
            the state's efforts to decarbonize the electricity sector.

          3)Author's statement: 



               Energy and water are intricately connected, and there is an  
               enormous amount of energy embedded in our water supply -  
               from the collection, production, transport, treatment and  
               delivery of water; to the direct consumption of water; to  
               the collection, treatment, and disposal or reuse of  
               wastewater.  Nearly 20% of California's energy supply is  
               used to move, heat, and treat water.





               While some of the water-energy related climate pollution is  
               already covered in the state's cap-and-trade program (via  
               the electricity generation sector), the state does not  
               currently have a clear accounting of the total greenhouse  
               gas emissions associated with the water system.  Thus,  
               water suppliers, treaters, distributors and end users  
               currently lack the information and opportunity to do their  
               part in voluntarily advancing our climate and water  
               conservation goals.  













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               SB 1425 establishes a voluntary emissions repository for  
               projects that reduce the carbon intensity of California's  
               water system.  This new registry will allow for entities  
               such as water agencies, large water consumers, businesses  
               and others to voluntarily track, measure, and baseline  
               their GHG emissions resulting from the water-energy nexus.


          








          REGISTERED SUPPORT / OPPOSITION:




          Support


          California League of Conservation Voters


          Clean Water Action


          Environment California


          Environmental Entrepreneurs


          Lutheran Office of Public Policy, California









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          Mono Lake Committee


          Sonoma County Water Agency


          The Climate Registry


          Tree People


          Union of Concerned Scientists 
          US Green Building Council, California Chapter


          Wholly H2O




          Opposition


          None on file




          Analysis Prepared by:Elizabeth MacMillan / NAT. RES. / (916)  
          319-2092















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